LTC

Question 1

LTC Benefits

Factors that Drive Product Growth

Answer 1

• Increasing life expectancies
• Aging of baby boomers
• Concern about outliving retirement savings

Question 2

LTC Benefits

Sales and Marketing Process

Answer 2

1. First Sale = Plan Sponsor selection of LTC insurer
2. Second Sale = Education and Marketing campaign to EEs to convince them to enroll

Question 3

LTC Benefits

Types of Plans (List and Define)

Answer 3

• Service Reimbursement
• Service Indemnity = Fixed benefit for day when LTC services are received
• Disability/Cash = Fixed benefit for each day insured is eligible

Question 4

LTC Benefits

Underwriting

Answer 4

• Guaranteed issue basis
• Accept or Decline coverage

Question 5

LTC Benefits

Premiums

Answer 5

• Based on initial age
• Level over lifetime on policy (unless increase is approved)

Question 6

LTC Benefits

Benefit Triggers

Answer 6

Inability to perform at least 2 ADLs or cognitive impairment

Question 7

LTC Benefits

Covered Services

Answer 7

• Nursing home/assisted living
• Home/Community-based care
• Hospice
• Caregiver training
• Respite care
• Independence support services
• Care management services

Question 8

LTC Benefits

Inflation Protection

Answer 8

• Periodic offers to purchase additional coverage
• Automatic inflation protection

Question 9

LTC Benefits

Nonforfeiture benefits

Answer 9

• Shortened Benefit Period = Lifetime max reduces to (Premiums Paid - Claims Paid)
• Reduced Paid-up Benefit = Daily and lifetime max reduce and extend for lifetime of insured

Question 10

LTC Benefits

Other Plan Features

Answer 10

• Death benefit
• Cash alternative benefit
• Bed reservation benefit
• Spousal riders
• Restoration of benefits

Question 11

LTC Benefits

Policy Exclusions

Answer 11

• Preexisting conditions
• Mental disorders
• Alcoholism/Drug Addiction
• Conditions from war, attempted suicide, felony

Question 12

LTC Benefits

Claim Administration

Answer 12

• Benefit Eligibility Assessment = Insurer determines if benefit trigger is satisfied
• Care Management = Provider and Insurer determine care plan

Question 13

LTC Benefits

Tax

Answer 13

• Premiums paid by ER and EE = deductible
• Benefit is not taxable income
• ER contributions are not taxable to EEs

Question 14

LTC Benefits

Group vs. Individual Coverage (Differences)

Answer 14

Individual =

• larger market
• more in-depth sales and underwriting process
• Target market = older